INDIAN BANKING SECTOR

1) Robust asset growth: Increase to USD1.5 trillion in FY12 from USD1.3 trillion

in FY10

2) Revenue increases: grew almost four-fold from US$ 11.8 billion to US$ 46.9 billion

3) Growing lending and deposit: Total lending and deposits have increased at CAGR

of 22.8 per cent and 21.2 per cent, respectively

4) Higher ATM penetration: Total number of ATMs in India have increased to

1,04,500 in 2012

5) Rising rural penetration: Due to Financial Inclusion Plan (FY10-13), the

banking connectivity in India increased more than threefold to 211,234 villages in

2013

Indian Banking Overview

Reserve Bank of India

Banks Financial Institutions

Scheduled CommercialBanks (SCBs)

Cooperative creditinstitutions

Public sector banks (27)

Private sector banks (22)

Foreign banks (41)

Regional Rural Banks (RRB) (62)

Urban cooperative banks(1,674)

Rural cooperative credit institutions (96,751)

Source: RBI - Reserve Bank of India, Aranca Research Note: The data on number of banks belongs to FY12

All-India financial institutions

State-level institutions

Other institutions

Indian Banking Sector GrowthGrowth in credit off-take over past few years (USD

billion)

Growth in deposits over the past few years (USD billion)

High growth of the Indian Economy

Favourable Demographics

Financial Inclusion(FI)

Private Banking and Wealth Management

Infrastructure Financing

Technology Innovation

Growth Drivers of Banking Sector

Basel III norms

Intensifying Competition

Increasing NPA

Licensing Requirement

Key Challenges

PEST Analysis on the Banking IndustryFactors Affecting the Industry

- Monetary Policy- Regulatory Framework- Budget & Budget Measures- Changes in interest rates

Political Factors Economic Factors

- More savings- More Capital Formation- Increase in productionof goods and Services

- Banking Channels

Social Factors

- Increase in population- Changes in lifestyle- Easy way of lending money- Exploring banking facilities inrural areas

Technological Factors

- Internet Banking- IT Services & Mobile Banking- Credit Cards- Improvement in efficiency

P E

S T

Michael Porter Five Forces

Licensing Requirements are very tough

Product differentiation very difficult

NBFCs, Mutu alfunds, Govern ment Securities and t-bills increasing rapidly

Large no. of banks

Low switching costs

High fixed costs

High exitbarriers

Banks have to meet many regulatory criteria, made by the RBI (fairly complex in India)

Provides homogenous kinds of services, so there is high chance that customers switch their banks

Threat

of n

ew

entran

ts

Threat

of n

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substitutes

Compe

titive

Rivalry

Bargaining

Pow

er of

Supp

liers

Bargaining

Pow

er of

Custom

ers

Entry Barriers in the Industry

High MediumLow

Indian Banking Industry : Not Attractive, unless differentiated

HDFC Bank

• Established in 1994, HDFC Bank is the second largest private sector bank in India. HDFC was amongst the first to receive an 'in principle' approval from the RBI to set up a bank in the private sector

• Divisions – Retail banking, Wholesale banking and Treasury operations

• Size – Number of branches and extensions: 3,062*• Number of ATMs: 10,743*• Number of employees: 66,076 as on March

31, 2012• Total assets: USD73.5 billion*

• Recognition –• Best Retail Bank in India (Asian Banker:2012)• Best Performing Bank – Private (CNBC

TV18:2011)

Net profit USD (millions)

Source: Company Annual Reports, Aranca ResearchNote: * - As on March 2013

Note: * CAGR - Compound Annual Growth Rate, CAGR*: is calculated in INR terms

FY13**: Data till February 2013

237.8

331.3467.7

614.3

818.0

1,076.5

1,235.8

FY07 FY08 FY09 FY10 FY11 FY12 FY13

CAGR: 31.6%

HDFC BANK

147.6264.1

452.7 485.4

753.0

936.4

998.0

FY07 FY08 FY09 FY10 FY11 FY12 FY13

Axis Bank

• Established in 1994, Axis Bank is the third largest private sector bank in India. The bank is capitalised to the extent of USD86.0 million with the public holding at 54.1 per cent as on 31st March, 2012

• Divisions – Treasury, retail banking, corporate/wholesale banking and other banking business

• Size – Number of branches and extensions: 1,947*• Number of ATMs: 11,245*• Number of employees :

31,738 31,2012• Total assets: USD63 billion*

as on March

• Recognition –• Most Productive Private

Sector (FIBAC:2011)Bankaward

• 3rd strongest bank in Asia Pacific region (Asian Banker: 2011)

Net profit USD (Millions)

Source: Company Annual Reports, Aranca Research Note: FIBAC - FICCI and Indian Banks’ Association Conference

* - As on December 2012

CAGR: 37.5%

AXIS BANK

Income break-up (FY13) Advances and deposits (USD billion)

Source: Company Annual Reports, Aranca Research

60%

34%

6%

Net Interest income

Fee Income

Other Income

8 12

12 17

22

3035

46

18

2429

3946

36

FY07 FY08 FY09 FY10

Advances

FY11 FY12 FY13

Deposits

ICICI BANK

•ICICI Bank was founded in 1954 as an Indian multinational bank and financial services company headquartered in Mumbai. Based on 2013 information, it is the second largest bank in India by assets and third largest by market capitalisation.

• Divisions – Treasury, retail banking, , life and non-life insurance, venture capital and asset management, corporate/wholesale banking and other banking business

• Size – Number of branches and extensions: 3350* & 10486 ATM’s & has a presence in 19 countries

•Recognition – •ICICI Bank Limited has been conferred the Best Remittance Business award •Ms. Chanda Kochhar, MD & CEO, was also featured in the Power List 2013 of 25 most powerful women in India by India Today, for the third year in a row

ICICI Bank